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DepoMed Inc. Message Board

  • akos103 akos103 Jul 22, 2006 8:44 PM Flag

    Depomed had Seven suitors 4 Glu

    Depomed Inc. taps King to co-promote drug
    San Francisco Business Times - July 7, 2006by Daniel S. Levine
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    Depomed Inc. entered into an agreement with King Pharmaceuticals Inc. to have King co-promote its once-daily version of a popular diabetes drug, a deal consummated after negotiations with seven other suitors.

    The agreement is unusual because it does not require King to make any upfront payment to the Menlo Park specialty pharmaceutical company for its drug Glumetza, a time-released version of the $1.4 billion type II diabetes drug metformin. Metformin is used to stabilize levels of blood sugar.

    The lack of upfront cash doesn't reflect poor negotiating skills, but rather Depomed's ambition to be a commercial enterprise.

    Under the terms of the co-exclusive agreement, Bristol, Tenn.-based King takes responsibility for selling Glumetza in the United States and Puerto Rico while Depomed maintains the right to co-promote the drug with its own sales force should it choose to do so as long as it does not seek out doctors on King's call list.

    "While we anticipate it will be some time before we have our own sales force, the co-promotion right was very important for us," said John Fara, CEO of Depomed on a conference call with analysts. "In lieu of a traditional license agreement with an up front fee, we opted for this co-promotion agreement, which provides us a pathway to build our own commercial organization, enabling us to drive greater revenue and earnings growth."

    Important timing
    The agreement comes in time for the company to hit its target of launching Glumetza in the third quarter.

    For King, which is in late-stage trials of its blood pressure drug Altace as a therapy that can delay the onset of type II diabetes, the deal provides it with a drug that offers a large market opportunity and a complementary product to Altace for doctors who are high prescribers of metformin.

    "Strategically, Glumetza complements our existing portfolio of products very well and provides us with a means to grow our presence specifically in the diabetes market," said Steve Andrzejewski, chief commercial officer at King.

    For Depomed, the deal provides an established team of more than 400 sale reps who will hit the field to promote Glumetza, which the company said would have cost $80 million to replicate. It also allows Depomed to make use of what it learns in its work with King to eventually build its own sales team.

    "We're moving now from a development-stage company -- we've shown the world we can do that very effectively -- to a company that wants to have a commercial presence," said Fara. "This certainly gives us the footing to get there."

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